EDUCATIONAL: Commonly Asked Questions
Escrow and Title Insurance
Questions with Answers
What Do I have to do while in Escrow?
After you read this page, you are encouraged to read What Customers Need to Know About Escrow/ Title Insurance . Then, the key to any transaction as important as your sale, purchase or loan is to read and understand your escrow instructions. If you do not understand them, you should ask your escrow officer to explain the instructions.
Your escrow officer is not an attorney and cannot practice law; you should consult your lawyer for legal advice. Do not expect your escrow officer to advise you as to whether or not you have a "good deal" or are doing things the right way. The escrow officer is there to follow the instructions given by the principals in the escrow.
In order to expedite the closing of the escrow, you should check with your escrow officer as to what specific items you could do to assist. Ask the question – "What can I do to expedite the closing of this escrow?"
Respond quickly to correspondence. This will assist in the timely closing of the transaction. If you are required to deliver funds into the escrow, make sure that you provide "good" funds in the form required by the escrow officer. Company procedures differ in this regard, and there are many ways you can help at the time of closing; check with your escrow officer. Do not give the escrow officer a personal check and expect the escrow to close immediately; the escrow can only close on cleared funds, and the processing of a personal check can take days, possibly even a week or more.
When the escrow officer closes the escrow, some of you may want the closing papers, checks, title policies, statements, etc. Made available immediately. There are many aspects to the closing of the escrow, and some of these cannot be processed on the day of the closing; they may take several days. If you have a special need, for example, a cashier’s check on the day of closing, you should communicate that need to the escrow officer early in the processing of the escrow.
Can A Spouse Be On Title That Isn't On The Mortgage? No. The lender may require a spouse to "sign off" the title. Then, as soon as the escrow records, you can then put a spouse back on. You will need to acquire a deed and complete it and then record it yourself See: Common Forms of Ownership , Sample Deeds and Homesteading . An escrow officer can help you with this.
What is a Reconveyance?
Upon payment in full on a Note secured by a Deed of Trust the beneficiary (lender) relinquishes his original note and original deed of trust to the borrower. The note and Deed of Trust are given to the trustee who, for a small fee, issues a “Deed of Reconveyance” and records it. A Deed of Reconveyance wipes a lien (Deed of Trust) off the property record.
Mortgage Escrow and Your New Loan
If you are obtaining a new loan, your escrow officer will be in touch with the lender who will need copies of the escrow instructions, the preliminary title report and any other documents escrow could supply. In the processing and the closing of the escrow, the escrow holder is obligated to comply with the lender’s instructions.
It has become a practice of some lenders to forward their loan documents to escrow for signing. You should be aware that these papers are lender’s documents and cannot be explained or interpreted by the escrow officer. You have the option of requesting
a representative from the lender’s office to be present for explanation, or arrange to meet with your lender to sign the documents in their office. One of the duties of the Loan Officer is to order the homes insurance (structural, flood, quake, hazard etc) and provide this information to the escrow officer. A mortgage company takes about 48 hours to review and fund your loan application. Your loan officer will make sure he has all needed information from you for submission several days prior to expected closing date. You and/or your Realtor can call the Loan Officer for a status on your loan at anytime. This will help you plan for the U-Haul and NOT having to live in a hotel or car due to a delayed closing of escrow.
NOTE: An escrow officer can not force a lender to fund.
Escrow (Mortgage). What is a Closing Statement?
A closing statement is an accounting, in writing, prepared at the close of escrow which sets forth the charges and credits of your account. The items shown on the statement will reflect the purchase price, the funds deposited or credited to your account, payoffs on existing encumbrances and/or liens, the costs for all services and a determination of the funds you are entitled to at the close of the escrow. When you receive your closing papers, review the closing statement; it is extremely logical and reflects the financial aspects of your transaction. If anything does not make sense to you, you should ask your escrow officer for an explanation.
When going through your closing papers, examine all of them; there may even be a refund check hiding in there. Cash the check quickly, please. Be sure to have the check properly endorsed. All payees must endorse the check. This will eliminate the check being returned unpaid due to irregular or missing endorsements. Your closing statement and all other escrow papers should be kept virtually forever for income tax purposes.
Your accountant will need the information about the sale or purchase of the property. IRS and other agencies may require you to prove your costs and/or profit on the sale of any property. The closing statement will assist in this task.
Do not rely on your escrow holder retaining the escrow file so that you can "always call and get copies of the closing statement." Most escrow holders will be destroying the files after the statutory retention period, usually five years. Maintaining and storing the closed escrow files is a costly endeavor to the escrow holder. Therefore, a nominal fee may be charged by your escrow holder for the retrieval of a file from storage, photocopying the requested documents and returning the file to storage.
What Escrow Fees and Closing Costs will be Charged?
Escrow fees are not regulated by the State. Escrow holder, like any other businesses, will charge fees that are commensurate with the costs of producing the service, the liability undertaken, and the overhead expenses which include a profit factor. Therefore, the fees will vary between companies and from county to county. Normally, the escrow holder will follow its minimum fee schedule, which will provide for extra charges based upon the differing elements of your escrow. On occasions, an additional fee will be charged for unusual expenditures of time on a given transaction. The escrow holder has no control over the costs of other services that are obtained, such as the title insurance policy, the lender’s charges, insurance, recording charges, etc. Your escrow officer, upon request, can provide you with an estimate of the escrow fees and costs as well as fees charged by others, provided such information is available. The Escrow / Title Insurance Fees page may help give you a general idea.
What About Escrow Cancellations?